7 Advantages of a Family Business

A family business can bring financial independence and also have very positive benefits for your kids.

The family structure is changing but the same technology and opportunity that attacks old family values can be used to enhance new family bonds through small family businesses.

Our youngest daughter, Eleanor, was the keen entrepreneur. She wanted to work in our direct mail business before she could even read and write. When we told her she had to read before she could affix labels to the envelopes she asked… “don’t the numbers (zip codes) go on the bottom?” She could tell letters from numbers and had proudly figured out how to get the job done. It’s little wonder that she has an amazing business now as you’ll see below.

Ele wrote this note about a recent event in her family business. She has brought her husband and the families of her clients into her business! She wrote: Dad, I had one of my proudest work evenings ever last night at my end of term competition. The kids were outstanding and I was one proud principal. To top it off 10 of my students dads’ surprised the audience to a dance to ‘FAME’ at the end of the night. We had secretly been rehearsing them for 4 weeks and it was amazing! So entertaining and the dads were so ‘in time’… of course one of those dads was our very own Benjamin Marsden! What a long suffering and supportive husband I have-but actually I think he had the time of his life! He said after he felt quite famous and all the mums were asking who he was!! As you can see from the photo the dads looked every bit the part. Thankfully we got it all filmed so you can look forward to watching as soon as I get the footage from the videographer.

There is no doubt that technology and rapid change creates pressure on families today. First and foremost it attacks parental control. Mass media aimed at capturing and directing children’s attention bombard children every waking hour.

Economic pressures create medical, educational and social norms that channel family decisions towards areas of greater profits for insurance, big pharma and chemical agri businesses rather than better family choices.

The global economy creates family by creating opportunity further and further from home.

The U.S. divorce rate has more than doubled since the 1960s. The number of households headed by single or divorced women has increased by 46 percent since 1980. In 1977 almost 18 million children were living in single-parent homes in the United States. Today that number has experienced a 100 percent increase.

Violent confrontations among family members has grown. Approximately 2.8 million wives a year are beaten or abused by their husbands. Even more children are abused each year, physically, sexually, or through neglect, and at least 2,000 of them die of their injuries.

These pressures take place amidst growing economic stress. There was a record decline in family wealth between 2007 and 2010.

The family structure is changing but the same technology and opportunity that attack old family values can be used to enhance new family bonds through small family businesses.

American Express’s Open Forum for Small Businesses recently published this report showing benefits in a family business:

7 Advantages of a Family Business

If you’ve ever watched QVC, you probably know about Honora, the company that pioneered marketing high-quality pearls to the masses. The growth of the 64-year-old family business is legend in the gem industry. How did it get there?

A business analyst might cite Honora’s early alliance with China to bring freshwater pearls to the West, its 20-year branding campaign, or its total focus on freshwater pearls, even to the point of risking a third of its revenues.

Those are all great aspects of Honora’s story, but ask CEO Joel Schechter, whose father started the business, and he’ll tell you the real competitive advantage: family. Schechter’s sons, sisters and other family members work in the business.

In a recent interview, Schechter shared some benefits to running a family business.

1. Speed. “In a family business, we can think about something in the morning and begin working on it in the afternoon,” says Schechter. After all, the family is a natural team. And in the pearl business, where new designs must get to market fast, speed is everything.

2. Solidarity. Competing agendas make for harsh office politics. Fights happen in the family, too, but when the goal is to help the family business win, turf battles diminish. “We’re much faster than companies that have to go through a more politicized process of getting things done.”

3. Nature plus nurture. Some of us are just born to entrepreneurial risk-taking — so it’s likely our kids are, too. When kids grow up in the business, they absorb the skills it takes to succeed. Schechter began working in the family business as a boy. “I can tell you as a son of the owner, you really get to know the life that your parent leads. You really understand the trials and tribulations, and what it took them to make a living for you.” Icing on the cake: Kids can see firsthand the work it takes to win at business.

4. Authenticity. Family is the place where you can let things fly. “We laugh more here,” says Schechter. “And we yell more here. Sometimes family members can get to be more emotional with you than non-family, but we wouldn’t have it any other way.” The ability to be fearlessly and emotionally honest can help a family business thrive.

5. Trust. Trust is essential in all business, but especially so in a business where trade secrets are make-or-break. “For us, there’s a very high level of trust among family members. And we can talk to each other very freely and openly.”

6. Control. Family businesses control their fate. “We’ve looked at different scenarios for investors. And it always kind of comes back to the same thing: Do we want to lose control of this family business, of the specialness that we have of working with each other on a day-to-day basis? It’s nice for me as a father to work with my sons.”

7. Next-gen ingenuity. Companies can lose their competitive edge when leaders lose touch with the youth market. A smart family business keeps its edge naturally when it brings in the next generation. At age 30, Schechter’s son Michael has become the industry guru on social networking. “My son communicates with hundreds of thousands of people at the same time. I’m very lucky to have somebody who’s really at the forefront.”

See the entire American Express report below.

The British government also has a great page on family businesses at their Businesslink.gov UK site that says:

Family-run businesses

Advantages of family businesses

If you start or join a family business you’re likely to benefit from a range of advantages which you often don’t find in other enterprises. These include:

• Common values – you and your family are likely to share the same ethos and beliefs on how things should be done. This will give you an extra sense of purpose and pride – and a competitive edge for your business.

• Strong commitment – building a lasting family enterprise means you’re more likely to put in the extra hours and effort needed to make it a success. Your family is more likely to understand that you need to take a more flexible approach to your working hours.

• Loyalty – strong personal bonds mean you and family members are likely to stick together in hard times and show the determination needed for business success.

• Stability – knowing you’re building for future generations encourages the long-term thinking needed for growth and success – though it can also produce a potentially damaging inability to react to change.

• Decreased costs – family members may be more willing to make financial sacrifices for the sake of the business. For example, accepting lower pay than they would get elsewhere to help the business in the longer term, or deferring wages during a cashflow crisis. You may also find you don’t need employers’ liability insurance if you only employ close family members.

See a link to the entire page below.

For every problem there is an opportunity! This is very true when it comes to technology and the family. Technology and rapid social economic change create enormous pressures and opportunity for the family.

Gary

Learn how to develop a family business at our upcoming Super Thinking plus Investing and Business Seminar. Families welcome!